Trump blocks Broadcom-Qualcomm deal over China concerns

President Donald Trump's "America First" agenda blocked what would have been the largest technology merger in history Monday — barring Asian chip manufacturer Broadcom's $117 billion takeover bid for U.S. rival Qualcomm amid national security and economic concerns about China.

The decision comes after a review by the Committee on Foreign Investment in the United States determined that an acquisition by Singapore-based Broadcom could diminish Qualcomm's investment in 5G wireless technology and eliminate an important U.S. supplier of telecommunications equipment to federal defense agencies. That would play to China's favor as its own companies look to take the lead in developing the next-generation technology.

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Taking the uncommon step of blocking the deal dovetails with Trump's mantra of economic protectionism as well as his hardening view that the U.S. relationship with China, its largest trading partner, is wildly unbalanced and unfair. Just last week, Trump imposed hefty tariffs on steel and aluminum in a move widely seen as an effort to punish China.

"The proposed takeover of Qualcomm by the purchaser is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited," the White House said in a statement.

This is the second time Trump has blocked a China-related deal. In September, he prevented a Chinese-backed private equity firm from buying U.S.-based Lattice Semiconductor Corp. The administration has shown little hesitation to block other large transactions: It has also sued to prevent AT&T's proposed $85 billion acquisition of Time Warner, saying it would harm competition in the U.S. media market.

In recent weeks, Broadcom made increasingly aggressive overtures for Qualcomm as the company consistently rebuffed its offers as too low and worried the deal wouldn't clear U.S. regulators. Broadcom hiked up its best offer to $117 billion and publicly committed to invest in 5G technology. It also tried to install a new board of directors at Qualcomm.

"Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns," the company said in a statement, adding that it's reviewing Trump's order.

The development of high-speed mobile technology, or 5G, is widely viewed as a commercial and national security imperative for the U.S. As the range of internet-enabled devices continues to expand, from smartphones to cars to military equipment, the country is in a global race to build the fastest and most secure networks in the world.

Broadcom executives have argued their company is American in most ways, noting the majority of its employees and investors are based in the U.S. and most of its executives hold U.S. citizenship. The company is in the process of shifting its headquarters to San Jose, Calif., and said it expects the relocation to be completed by April 3.

CFIUS expedited its review of the deal after admonishing Broadcom for recently taking steps to relocate to the U.S. without providing the government with five days of advanced notice as stipulated in an interim order the Treasury Department issued on March 4. That CFIUS recommended to block the deal just over a week later marks an unusually rapid timeline for the panel, which is comprised of top officials from across the Treasury, Defense, Homeland Security and Commerce departments, among other federal agencies.

Under Trump, CFIUS approved Broadcom's earlier acquisition of Brocade Communications in November. That decision came shortly after Broadcom CEO Hock Tan appeared at a White House news conference with Trump to announce his company's headquarters shift to the U.S. Tan largely credited the Trump administration's tax reform plan for the move.